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Monday, October 1, 2018

Cashing in on Oregon's Bottle Bill

As a lifelong supporter of recycling, I've always returned my empties. I was a big proponent of the BottleDrop redemption centers when they started showing up a few years ago. Instead of returning empties to my bottleshop or grocery store, I could drop bags off every few weeks.

The notion that the BottleDrop concept might be part of a money grab didn't occur to me. Recent experiences there led me to take a deeper look at what's going on. Sure enough, BottleDrop centers are part of a giant money making scheme.

Oregon's Bottle Bill, you may recall, came to fruition in in 1971. It was the first of its kind in the country. The idea was that putting a nickel deposit on beer and soda containers would reduce what was then considered to be a growing litter problem.

The law has been updated several times, most recently in 2011, when it was expanded to include all drink containers except wine, liquor and milk as of 2018. More importantly, returns would mostly move away from large grocery stores to BottleDrop redemption centers.

If your Fred Meyer, for example, is located within 2 miles of a redemption center, they don't have to take empties. If your Freddy's is within the 2-mile limit, the store can still decline to take empties if it's willing to pay a $200 fine per day. My Fred Meyer is apparently doing just that.

Of course, it's been common knowledge for decades that grocers and distributors hate the headaches attached to redeeming empties. The smell and the mess come to mind. Grocers also don't like the extra staffing required to count empties or keep machines functioning.

By 2011, grocers and distributors realized recycling proponents would succeed in expanding the list of containers requiring a deposit. The 2011 Bottle Bill update was a compromise supported by grocers, distributors and recycling advocates. It included establishment of the BottleDrop redemption centers, as well as language requiring the container deposit to increase to 10 cents if the rate of return dropped below 80 percent and stayed there for two years.

At this point, it pays to know how Oregon's redemption system works. You might think it's managed by the state. Not so. When a retailer buys product to put on store shelves, the distributor is paid for the drinks, including deposits on the containers. When a customer returns the container to the store or a BottleDrop redemption center, the deposit is returned.

The rub is that something like 35 percent of the containers (600 million in 2015) eligible for return aren't returned. Some wind up in the garbage. Some wind up in curbside recycling. When that happens, distributors, not the retailer or the state, keep the cash. A lot cash...about $30 million in 2015 according to a 2017 Willamette Week story.

Some were concerned about the potential increase to 10 cents when the 2011 update was being configured. They saw it as a windfall for distributors. Return rates at 5 cents had been dropping, prompting the fear that 10 cents would happen. Distributors pushed the idea that return rates would improve thanks to the BottleDrop centers and that the 10 cent deposit would never happen.

Of course, we now know that was bad advice. In July of 2016, the OLCC announced that the redemption rate had dropped below 80 percent for two consecutive years. The 10 cent deposit on containers went into effect in April 2017.

That led to charges that distributors knew all along the deposit would increase. Slow execution was probably part of the problem. Distributors agreed to build 45 BottleDrop centers as part of the 2011 compromise. By my count, there are fewer than 25 of them today. Distributors say they're behind because locating and implementing redemption centers got too expensive. Food for thought.

For a while, I wondered why BottleDrop centers are always such a gross mess. I wondered why I regularly find machines not working and see long lines of folks waiting to return containers. I wondered why these places routinely appear to be drastically understaffed. I wondered about some of the quirky rules they have in play. But now I get it.

The fact is, distributors have a financial disincentive to keep BottleDrop locations clean, well-staffed and running smoothly. With the 10 cent deposit and the expanded list of eligible returnables, the $30 million windfall they got in 2015 has likely doubled..or increased significantly, at least.

Distributors big and small are no enemies of mine. They have an important job to do. But if we want Oregon's redemption system to be run efficiently, maybe the best approach would be to have it run by an entity that doesn't directly benefit by it not being operated efficiently.